Manufacturing has always played a pivotal role in the MedTech industry, contributing to the production of highly precise medical devices and other essential products. However, recent global supply chain disruptions exposed many fault lines that need a long-term sustainable solution.
According to research by McKinsey Global Institute (MGI), it is estimated that such disruptions can cause some MedTech companies to lose approximately 38% of their annual earnings over a decade.
The staggering impact of this disruption on the valuation coerced the MedTech industry to re-focus on existing supply chains and operations ecosystem to unlock value through efficiencies, optimization and managing demand cycles. The call for change saw resolute actions across the industry in hiring expertise from other discrete manufacturing industries to underscoring the importance of digital transformation across the enterprise, from confronting the status quo to updating the workflows that remove bottlenecks to upgrading outdated IT systems.
Decoding the digital conundrum
The ubiquitous “digital transformation” seems to have taken a chair of prominence from boardrooms to shop floors, and sometimes with varied perceptions on its role and impact within the same organization. In the scope of the supply chain and operations ecosystem, the impact of any digital transformation must start with a complete mapping of the interlock between various processes and workflows, IT and OT systems, the various data sources and analytics for better decision making. Once this is fully understood, only then can a true digital transformation blueprint de-clutter and make way to unlock business value.
For example, the shipment of a device from a manufacturing site to a hospital or health center is alone not enough, if it eventually becomes inventory at the site. The transparency of the workflows and utilization of the product within a care setting to its full commercial value will help understand the usage pattern that is ever so critical for managing a demand cycle. Unless we have systems that can help shine the spotlight on supply chain processes to the last mile, they cannot unlock the significant business benefit.
Many companies, even today, continue to rely on manually intensive and paper-based processes. The opacity of these traditional models has become the bane to cope with the fast-changing landscape. In the MedTech world, the manual creation and approval of device history record (DHR) templates are mandatory and for good reason. However, this is an arduous process and a time-consuming effort. To top it all, paper based DHRs are prone to manual errors, increase quality control issues and can sometimes lead to increased complaints in the field.
Role of “people” in digitalization of operations
The process of digitalizing involves significant changes to existing systems, workflows and calls for upgrading legacy tech. Most companies depend on executive action and boardroom conversations to deliberate and take effective actions. However, one of the often overlooked and usually underestimated challenges is to manage change itself across the organization. Many companies falter in the digital transformation journey, not because of executive inaction or budgets, but because they could not develop a culture of change management within the organization. Digital has the power to disrupt, and people are a critical link in the transformational journey.
There is a need to upskill the workforce and companies must incorporate this into the Digital Journey Playbook. Effective training plans to make employees comfortable with new systems in place on the shop floor are mandatory to reap long term benefits of the investments in digital.
A recent survey from the 2023 Future of work survey by McKinsey of the top 21 MedTech companies, which noted that 28% of operational heads believed there was a skills gap in the manufacturing workforce.
Building sustainable manufacturing systems
Most successful digital transformation initiatives in manufacturing seem to have some combination of the four foundational principles embedded into their playbook.
- Recognize the five-year obsolescence cycle: Reduction of technology debt is an ongoing process. The blueprint must enable scalability, agility and refactoring manufacturing and IT systems every five years.
- Integrate IT and OT: An integrated system that can effectively straddle the IT and OT systems. This will provide transparency and observability into workflows and enterprise-wide processes enabling real-time data exchange, analytics and automation.
- Shop-Floor Asset Intelligence: A granular view of your assets (Data, Equipment, Workflows) that can drive effective decisions on materials management, equipment maintenance, schedule planning, logistics and more.
- Data-driven manufacturing: An ability to integrate all the above seamlessly to drive a culture of continuous improvement and change management, thereby driving both bottom-line and top-line impact for a business.
In conclusion, the opportunity is rife for MedTech manufacturers to bring innovation, cost optimization and predictability in operations to address changing demand and a punctuated growth that the industry is witnessing today.
